US legislation aims to reform SBA's disaster recovery role

United States Senate Committee on Small Business and Entrepreneurship chair Mary L. Landrieu, D-La., has introduced ‘The Small Business Administration Disaster Recovery and Reform Act of 2009’ (S. 2731), a bill to reform the disaster recovery programs run by the Small Business Administration (SBA).

"This legislation will have an immediate impact on recovering businesses in the Gulf Coast," Senator Landrieu said. "Along with this recovery assistance, the bill makes commonsense disaster reforms to ensure the SBA's effectiveness after future disasters."

Following Hurricanes Katrina and Rita, impacted businesses - including ‘pioneer businesses’ that were the first to open after the storms - struggled to secure assistance from the SBA, their insurance companies, or other sources. These pioneer businesses served as second responders by quickly reopening their doors following the disaster, helping to spur both commercial and residential recovery. These local gas stations, grocery stores, or restaurants serve as key indicators for homeowners looking to return, but are often in need of immediate, short-term capital to reopen, purchase inventory or pay employees.

To provide targeted SBA assistance for these pioneer businesses, Senator Landrieu created a short-term $150,000 expedited loan program in the 2008 Farm Bill to serve as bridge assistance while these businesses wait for SBA loans or insurance proceeds. S. 2731 improves the Pioneer Business Recovery Program by increasing loan limits from $150,000 to $250,000 and allowing the SBA to activate the program as needed for both major and catastrophic disasters. This would ensure that the SBA can address the needs of these pioneer businesses and spur immediate recovery in local neighborhoods.

"Every disaster is different and could range from a disaster on the scale of Hurricane Katrina or September 11th, to an ice storm or drought. The modification in my bill would allow the SBA additional options and flexibility in the kinds of relief they can offer a community," Senator Landrieu said. "We must ensure that the SBA has the tools necessary to help our second responders: these pioneer business owners who reopen the local hardware store or gas station immediately following a disaster."

The bill also includes:

- 8(a) Extension: This provision would extend, for 2 years, eligibility for Gulf Coast businesses impacted by Katrina or Rita to participate in the SBA 8(a) program.

- State Bridge Loan Guarantee Program: This section would authorize SBA to guarantee approved state bridge loan programs following a major disaster.

- Coordination Between the SBA and the US Department of Agriculture (USDA) Disaster Programs: This provision requires the SBA to report within 120 days on gaps in small business assistance between the USDA and the SBA disaster programs. The SBA, in consultation with the USDA, must report on any legislative changes needed to improve these programs.

- Increase the SBA Loan Limits: SBA disaster business loan limits increased from $2 million to $4 million.

http://sbc.senate.gov/

•Date: 6th Nov 2009• Region: US •Type: Article •Topic: DR general
Rate this article or make a comment - click here